Reduction in rate of TDS & TCS – PIB

Reduction in rate of TDS & TCS – PIB

In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of Tax Deduction at Source (TDS) for the following non-salaried specified payments made to residents has been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021:-

S. No

Section of the
Income-tax Act

Nature of Payment

Existing Rate of TDS

Reduced rate from
14/05/2020 to
31/03/2021

1

193

Interest on Securities

10%

7.50%

2

194

Dividend

10%

7.50%

3

194A

Interest other than interest on
securities

10%

7.50%

4

194C

Payment of Contractors and
sub-contractors

1% (individual/HUF)

0.75% (individual/HUF)

2% (others)

1.5% (others)

5

194D

Insurance Commission

5%

3.75%

6

194DA

Payment in respect of life
insurance policy

5%

3.75%

7

194EE

Payments in respect of deposits
under National Savings Scheme

10%

7.50%

8

194F

Payments on account of re-purchase
of Units by Mutual Funds or UTI

20%

15%

9

194G

Commission, prize etc., on sale
of lottery tickets

5%

3.75%

10

194H

Commission or brokerage

5%

3.75%

11

194-I(a)

Rent for plant and machinery

2%

1.50%

12

194-I(b)

Rent for immovable property

10%

7.50%

13

194-IA

Payment for acquisition of
immovable property

1%

0.75%

14

194-IB

Payment of rent by individual
or HUF

5%

3.75%

15

194-IC

Payment for Joint Development
Agreements

10%

7.50%

16

194J

Fee for Professional or Technical
Services (FTS), Royalty, etc.

2% (FTS, certain royalties,
call centre)

1.5% (FTS, certain royalties,
call centre)

10% (others)

7.5% (others)

17

194K

Payment of dividend by Mutual Funds

10%

7.50%

18

194LA

Payment of Compensation on
acquisition of immovable property

10%

7.50%

19

194LBA(1)

Payment of income by Business trust

10%

7.50%

20

194LBB(i)

Payment of income by Investment fund

10%

7.50%

21

194LBC(1)

Income by securitisation trust

25% (Individual/HUF)

18.75% (Individual/HUF)

30% (Others)

22.5% (Others)

22

194M

Payment to commission, brokerage etc.
by Individual and HUF

5%

3.75%

23

194-O

TDS on e-commerce participants

1%

0.75%

(w.e.f. 1.10.2020)

2. Further, the rate of Tax Collection at Source (TCS) for the following specified receipts has also been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021:-

S.
No.

Section of the
Income-tax Act

Nature of Receipts

Existing
Rate of TCS

Reduced
rate from 14/05/2020 to 31/03/2021

1

206C(1)

Sale of

(a) Tendu Leaves

5%

3.75%

(b)Timber obtained under a forest lease

2.5%

1.875%

(c) timber obtained by any other mode

2.5%

1.875%

(d) Any other forest produce not being
timber/tendu leaves

2.5%

1.875%

(e) scrap

1%

0.75%

(f) Minerals, being coal or lignite or iron ore

1%

0.75%

2

206C(1C)

Grant of license, lease, etc. of

(a) Parking lot

2%

1.5%

(b) Toll Plaza

2%

1.5%

(c) Mining and quarrying

2%

1.5%

3

206C(1F)

Sale of motor vehicle above 10 lakhs

1%

0.75%

4

206C(1H)

Sale of any other goods

0.1%
(w.e.f 01.10.2020)

0.75%

3. Therefore, TDS on the amount paid or credited during the period from 14th May, 2020 to 31st March, 2021 shall be deducted at the reduced rates specified in the table in para 1 above. Similarly, the tax on the amount received or debited during the period from 14th May, 2020 to 31st March, 2021 shall be collected at the reduced rates specified in the table in para 2 above.

4. It is further stated that there shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar. For example, if the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar, it shall be deducted at the rate of 20% and not at the rate of 15%.

5. Legislative amendments in this regard shall be proposed in due course.